Introduction

The Financial Leasing Law, dated 10.06.1985 and numbered 3226,
and the By-Law Regarding Money Lending Activities, dated 30.09.1983
and numbered 90, with its appendices and amendments are abrogated
by the Law on Financial Leasing, Factoring and Financing Companies,
dated 21.11.2012 and numbered 63611 ("Law No.
6361" or "Law").

The purpose of Law No. 6361 is to regulate the establishment and
working principles of financial leasing, factoring and financing
companies which operate as financial institutions and to regulate
the procedures and principles regarding financial leasing,
factoring and financing agreements.

By being defined as "financial institutions" by Law
No. 6361, it is important to note that the aforementioned companies
form an important part of the financial system; a legal basis for
the establishment and operations of the companies is set up and an
effective supervision and auditing system is introduced.

One of the most important changes introduced by Law No. 6361 is
the establishment of the legal entity entitled the
"Association of Financial Leasing, Factoring and Financing
Companies" as a professional organization with the status of a
public institution, and the obligation imposed on the companies to
become a member of this Association. With the establishment and
commencement of the operation of the Association, all companies in
this sector will act in coordination and operate in compliance with
the legal regulations and certain standards.

Important Provisions of Law No. 6361

Pursuant to Temporary Article 1 of Law No. 6361, the provisions
of the legislation issued pursuant to the abrogated provisions and
which do not conflict with Law No. 6361 will be applicable until
the entry into force of the legislation to be issued pursuant to
the related law. According to the same article, the legislation
foreseen under Law No. 6361 shall enter into force within 1
year.

Pursuant to Temporary Article 2 of Law No. 6361 regarding the
adaptation period, companies subject to this law must adapt
themselves, within 3 years as of the date of publication of the law
to provision No. 5(1)(e) regulating the minimum capital, and within
6 months as of the date of publication of the law to provisions No.
8(1) regarding the establishment of a branch and No. 13(2) with
respect to the conditions required to be on the board of directors
and general managers (chief executive officers). In the event of a
force majeure, and if deemed acceptable by the Banking Regulation
and Supervision Board ("BRSA" or the "Board");
these periods may be extended provided that the extensions do not
exceed 1 year.

The establishment of a company in Turkey falling within the
scope of the Law is permitted only with a resolution adopted with
the vote of at least 5 members of the Board, provided that the
conditions foreseen under the Law are met. A company to be
established in Turkey shall fulfill the following;

a) Shall be established as a joint stock company and its number
of founders may not be less than five;

b) The share certificates shall be registered and in cash;

c) Shall bear one of the following expressions: "Financial
Leasing Company", "Factoring Company" or
"Financing Company" in its trade name;

d) The founders shall fulfill the conditions specified under the
Law;

e) The members of the board of directors shall have the
qualifications set forth under the corporate governance provisions
of this Law and have professional experience in order to realize
the planned activities;

f) Shall have a paid-in capital amounting to at least twenty
million Turkish Liras in cash and free of any collision,

g) The articles of association shall be in compliance with the
provisions of the Law;

h) Shall have a transparent and open shareholding structure
which will not prevent the active control of the Banking Regulation
and Supervision Agency ("Agency");

i) Shall submit an activity program detailing the business plans
with respect to the foreseen scope of activities, projections
regarding the financial structure of the establishment, budget plan
for the first three years and the company's structural
organization.

The companies that obtain an establishment license must also
receive permission to operate from the Agency. The permission to
operate given by the Board shall be published in the Official
Gazette.

The opening of a branch within the country or abroad is subject
to the permission of the Agency. Companies cannot engage in
organizational structures other than the establishment of branches,
and cannot grant franchises.

The Agency shall be informed before amendments are made to the
company articles of association. Unless the Agency delivers a
negative opinion within 15 business days regarding amendments to
the articles of association, these amendments will be included in
the agenda of the general assembly meetings of the company and the
Agency will be informed of the results. The current version of
company articles of association should be published on the company
website. The articles of association must be updated within 10
business days following the date of realization of the amendments.
Changes in the company address shall be notified to the Agency
within 15 business days following the date of such change.

The company board of directors cannot consist of less than 3
members, including the general manager. The general manager, or his
representative in his absence, is a natural member of the board of
directors. The general manager of the company must have
professional experience in the area of business management or
finance of at least 7 years; for the deputy general manager the
requirement is at least 5 years. Additionally, they must have
completed an undergraduate degree.

The supervision and auditing of the companies pursuant to the
Law is conducted by the Agency. The Agency is entitled to request
any and all information, even confidential information, which it
deems related to the provisions of the Law from the company, the
shareholders of the company, the corporations controlled by the
company and their branches and from other related real persons and
legal entities. In addition, the Agency may examine all of the
books, records and documents, including tax related records. The
companies are obliged to provide the information requested by the
Agency, to keep the books, records and documents available for
examination, to provide access to all the data processing system to
the occupational personnel of the Agency executing on-site
auditing, be in compliance with the purposes of the audit and
ensure the data safety. Further, the companies are obliged to
submit for examination any records in microfiche, microfilm and
other similar form with respect to any books, documents and reports
required to be preserved. Companies must submit all systems of
storing and recording information along with the relevant codes
necessary to access these records or to make these records
readable.

Conclusion

Law No. 6361 defining the financial leasing, factoring and
financing companies, which constitute an important part of the
financial system, together and as financial institutions, is
important and essential.

Footnotes

1 Published in the Official Gazette dated December 13, 2012
and numbered 28496.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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